Florida lawmakers tentatively agreed Saturday on a comprehensive proposal aimed at lowering Floridians’ skyrocketing property insurance rates, saying they’d finalize the plan with a vote on the package on Monday.
The proposal hits at high rates for wind coverage in several ways, including making more state backup coverage available to insurance companies at discount prices and calling for a direct rate rollback for the state’s largest insurer, state-created Citizens Property Insurance. It was on track to be voted on Monday and sent to Gov. Charlie Crist for his signature.
Lawmakers said making cheaper reinsurance from the state available for private insurance companies would lower rates for customers in the private market, although the amount of savings is still unknown.
“We have a deal,” said Sen. Steve Geller, D-Cooper City, as he presented the plan to House and Senate negotiators.
Lawmakers increased the amount of reinsurance the state provides, and lowered the cost at which it is available to private insurance companies. They also will force private companies who access the state’s cheaper reinsurance pool to pass the savings on to customers. Lawmakers said that will produce rate cuts of at least 20 percent in the private market.
Lawmakers also agreed on proposals to help Citizens customers, although the amount of rate reduction there was also unclear. Lawmakers agreed to waive Citizens from its obligation to pay into the catastrophe fund for an undetermined amount of time and were working out a few other remaining details, said Rep. Dan Gelber, D-Miami Beach.
The catastrophe fund question and the Citizens waiver were the two major stumbling blocks in negotiations up until late Saturday.
Lawmakers agreed earlier that Citizens should get to write other policies along with wind for its most vulnerable coastal customers, potentially reducing premiums.
Citizens, which is the state’s largest insurer and covers $407 billion in property, will be able to write multiperil policies in its high-risk accounts along the state’s coastline. The thinking is that enabling Citizens to offer a comprehensive policy that includes coverage such as fire would expand Citizens’ risk pool and lower its rates.
Now, it gets stuck with wind coverage in the high-risk areas while private companies write the rest of a homeowner’s policy.
Citizens spokesman Rocky Scott likened it to “putting all the 16-year-old drivers into one risk pool.”
Lawmakers agreed to the idea of expanding Citizens Saturday, but only under the conditions that the insurer create a business plan that the Legislature would approve. They also stipulated that the plan include a requirement that it produce at least a 10-percent rate reduction.
House members had been opposing the expansion, expressing frustration that the company kept changing the projected rate cuts the legislation might produce.
“We’re making policy like we’re feeling around in the dark,” said Rep. Jack Seiler, D-Pompano Beach, on Friday.
Gelber echoed the concerns of other House members Saturday, but backed the idea to let the company expand its coverage.
“This gives the hope of a rate reduction, even though I’m not a fan of how Citizens manages itself,” Gelber said.
Not letting Citizens write other policies would have meant that its customers likely would have only seen a temporary freeze in their rates at 2006 levels — an unacceptable outcome to many lawmakers, who emphasized repeatedly that they wanted cuts.
Rep. Ray Sansom, R-Destin, the House’s lead negotiator, said Saturday that the Citizens issue was “one of the main reasons we are here.”
Still, even with the ability to write other policies in the high-risk area, Citizens could not tell lawmakers exactly how much it could expect to cut rates. That question depends on how many customers Citizens can attract away from private insurers. If lawmakers eliminate a requirement that Citizens charge rates no lower than large private insurers, Scott said, Citizens can compete in the high-risk areas, gain customers, and then lower rates because the risk is spread more widely.
Enabling Citizens to compete more with private companies gave many lawmakers heartburn, but the pressure to lower rates has trumped other concerns.
“We came up here to reduce rates,” Seiler said.
Associated Press Writer David Royse contributed to this report.
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